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Market collusion with joint harm and liability sharing

Author

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  • Andreea Cosnita-Langlais

    (EconomiX - EconomiX - UPN - Université Paris Nanterre - CNRS - Centre National de la Recherche Scientifique)

  • Florian Baumann
  • Maxime Charreire

    (EconomiX - EconomiX - UPN - Université Paris Nanterre - CNRS - Centre National de la Recherche Scientifique)

Abstract

When it is impossible to identify ex post the producer of a product causing harm or the damage caused is indivisible although caused by multiple injurers, courts must apportion the total damage among tortfeasors. In this model we examine how such liability sharing rules affect the likelhood of tacit collusion. For this we use a standard Cournot oligopoly model where firms are collectively held liable for joint harm inflicted on third parties. The damage caused may be either linear or cumulative in total industry output. With repeated market interaction and grim strategies, we investigate the sustainability of collusion to derive some policy implications.

Suggested Citation

  • Andreea Cosnita-Langlais & Florian Baumann & Maxime Charreire, 2019. "Market collusion with joint harm and liability sharing," Working Papers hal-04141887, HAL.
    • Handle: RePEc:hal:wpaper:hal-04141887
    Note: View the original document on HAL open archive server: https://hal.science/hal-04141887
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    References listed on IDEAS

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    Cited by:

    1. Charreire, Maxime & Langlais, Eric, 2021. "Should environment be a concern for competition policy when firms face environmental liability?," International Review of Law and Economics, Elsevier, vol. 67(C).
    2. Eric Langlais & Andreea Cosnita-Langlais, 2022. "Incentives to differentiate under environmental liability laws : Product customization and precautionary effort," EconomiX Working Papers 2022-20, University of Paris Nanterre, EconomiX.
    3. Eric Langlais & Andreea Cosnita-Langlais & Tim Friehe, 2024. "Product Liability Influences Incentives for Horizontal Mergers," EconomiX Working Papers 2024-10, University of Paris Nanterre, EconomiX.

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    More about this item

    Keywords

    Cournot oligopoly; liability sharing rules; market collusion;
    All these keywords.

    JEL classification:

    • L41 - Industrial Organization - - Antitrust Issues and Policies - - - Monopolization; Horizontal Anticompetitive Practices
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • K13 - Law and Economics - - Basic Areas of Law - - - Tort Law and Product Liability; Forensic Economics

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